Chinese steel futures prices rose more than 2 percent on Tuesday, fuelled by concerns over tight supplies following an unverified report of more production curbs in the country’s biggest steelmaking city.

A local industrial website reported that Tangshan in Hebei province plans to impose a new round of production curbs from Tuesday until it is no longer identified as the city the worst air quality.

All sintering machines and shaft furnaces at mills in Tangshan will be ordered to cut production by 50 percent. Steel mills near the city centre will have to halve their blast furnace capacity, while other mills will have to reduce capacity by 30 percent, the report said.

Local authorities in Tangshan declined to comment on the report. Two traders based in Tangshan said they had seen no sign of mills closing, but said the report had driven up spot prices for steel billets.

The most-active construction steel rebar prices on the Shanghai Futures Exchange jumped as much as 2.4 percent in early trading to 3,881 yuan a tonne, the highest since June 15. Rebar was up 2.3 percent at 3,876 yuan ($586.72) a tonne at GMT 0241.

On Monday, China’s parliament asked all of China’s major polluters to install real-time emissions monitoring systems before the end of this year in order to improve surveillance in the country and bring lawbreaking firms into line.

“New environmental measures lifted market sentiment, while spot trade is also active at this moment, which helps to push futures prices up,” analysts at CITIC Futures said in a note.

Prices of steelmaking ingredients also rose as the market expects steel mills that have closed for environmental checks to reopen and replenish their stocks.

At least two steel mills in Xuzhou city in China’s second biggest steelmaking province are preparing to resume production after shutting for 2-1/2 months for an environmental upgrade.

Iron ore for September delivery on the Dalian Commodity Exchange gained 1.1 percent to 462 yuan a tonne on Tuesday.

Coking coal futures edged up 0.1 percent to 1152.5 yuan a tonne, while coke contracts climbed 1.1 percent to 2,033.5 yuan a tonne.

 

Source: in.reuters.com

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